Greek companies and productivity improvement policies

The periods of high growth of the Greek economy proved to be historically unsustainable, as they were always based on large foreign borrowing.

Furthermore, despite the country’s consistent participation in European institutions, the Greek economy has always been characterized by productivity lag, low export activity, introversion and severe institutional pathogenesis. Regarding the business ecosystem, it could not be underestimated that the majority of firms in Greece, are overwhelmingly small, and are involved, market-wise, with the purchase of non-internationally traded services and goods. At the same time, the particularly high rates of self-employment and the informal economy in the country, constitute a permanent structural disadvantage.

A set of central policies for improving the productivity and competitiveness of Greek companies is as follows:

1. Reduction of friction from taxes and labor contributions, ie for example reduction of insurance contributions, solidarity contributions, inclusion of incomes in a single tax scale, etc.

2. Implementation of support programs for small and medium enterprises, for their access to financing investments related to digital upgrade, new technologies and new production methods.

3. Increase budget expenditure on research and development and reduce production costs through more favorable tax treatment of depreciation for investments, mainly for fixed equipment and innovation.

4. Institutionalizing strong incentives to merge small and medium-sized enterprises, with the aim of achieving expanded financing capacity.

5. Simplification of the complex tax code, by minimizing the exceptions, in order to exclude any mechanism of tax evasion and shadow economic activity.

6. Development of a universal framework for the implementation of electronic payments in real time, in all sectors of the economy.

7. Strengthen the special sections in the courts for highly specialized financial cases, while expanding the out-of-court dispute resolution mechanisms.

The recent EU forecasts for the period 2021-23 anticipate recovery dynamics for the Greek economy. The ultimate goal for the country should be to increase the real per capita income, which traditionally deviates far from the European average. A goal that has been established for decades as impossible.

Mr. P.I. Xydonas is a professor at the ESSCA Grande École.